The IRAS has finally updated their website and clarified their position on the GST treatment on virtual currencies (e.g. Bitcoins).
IRAS’ position is that virtual currencies are not considered ‘money’, ‘currency’ or ‘goods’ for GST purposes. So, the supply of virtual currency is to be characterised as a supply of services. How this will affect you as a GST-registered trader can be summarised as follows:
1. If you use virtual currencies to pay for goods or services, the transaction will be considered as a barter trade. So, there will be two supplies to be made – one by the supplier who supplies the goods and services, and another by you who use virtual currencies to pay the supplier.
GST will need to be charged on each supply if the respective supplier is GST-registered. However, if you use virtual currencies to pay a supplier belonging outside Singapore, you need not charge GST as the supply will be zero-rated.
As a concession, if you use virtual currencies to buy virtual goods or services within the gaming world, you need not charge GST until they are exchanged for real monies, goods or services.
2. If you are a GST-registered trader and you sell virtual currencies as a principal, you will have to charge GST on the sale of the virtual currencies, unless the sale is made to a person belonging outside Singapore.
Where you act as an agent for another party when selling the virtual currencies, you need to charge GST on the commission fees you receive, unless the service is supplied to a person belonging outside Singapore.
Trading fees charged by a virtual currency exchange located in Singapore are subject to GST if that exchange is GST-registered.
3. Goods imported and paid for using virtual currencies are subject to the same import GST rules and reliefs as those paid for using real currencies.
If you have any questions regarding the above, please contact us at firstname.lastname@example.org.
for WHM Consulting Pte Ltd